Consultant: Cuts to Detroit Pensions and Healthcare Inevitable

Testifying at bankruptcy hearing

Cuts to Detroit's public pensions and retiree healthcare were inevitable given the city's sagging finances, a top consultant for the city testified on Friday during the third day of a trial to determine whether the city is eligible for bankruptcy.

Money owed to Detroit workers and retirees is a key factor in the case, which will also hear testimony by Kevyn Orr, Detroit's state-appointed emergency manager. Orr is expected to explain efforts to negotiate with the city's numerous creditors, including retirees and pension funds, before deciding to file for the largest-ever Chapter 9 municipal bankruptcy on July 18.

A key claim made by attorneys representing the city's unions, retirees and pension funds is that Orr and his team were intent on filing for bankruptcy and did not make best efforts to negotiate with them prior to the bankruptcy filing. They also claim that plans to cut pensions would violate the Michigan Constitution.